Characteristics of Mercantilism in Some Countries

2.3.2. The period between the 16th and 17th centuries

This period is considered “true mercantilism”.

- The characteristic is that wealth is still considered as currency, a country must accumulate money, and the way to get rich is still foreign trade.

- But the difference from the early period is that: "monetary balance" is not considered as the main thing, "commercial balance" is considered as the main thing.

- Do not prohibit the export of money, condemn the hoarding of money in the country, at the same time encourage the expansion of exports, and also approve the import of goods from abroad on a large scale if it has an effect on the economy.

Maybe you are interested!

+ Prohibit the export of tools and raw materials, conduct intermediary trade, encourage exports, and protect domestic goods.

+ For import: approve the import of raw materials for processing and export.

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- Allow the export of money to promote trade and circulation of goods, condemn

money accumulation

- The main purpose of this stage is still to accumulate money for capitalism but mainly by economic means.

2.4. Characteristics of mercantilism in some countries

2.4.1. British Mercantilism

IT in England was born earliest and most mature in Western Europe in the 16th - 17th centuries. IT in England developed through 2 stages:

- Phase I (15th - 16th century) is called the system phase of "Monetary Balance Sheet" . A typical representative is William Stapphot (1554 - 1912).

At this stage, economists identified wealth with money, they did not understand the relationship between the circulation of goods and the circulation of money. Those who followed IT sought every way to increase monetary wealth, accumulate money by administrative measures such as: prohibiting the export of money abroad, concentrating trade in controllable areas, forcing foreign traders to spend all their money on British soil, the exchange rate and the amount of money converted to foreigners according to the regulations of the State.

Commenting on the IT era, Friedrich Engels wrote: “Nations oppose each other like misers, holding their precious purses in both hands, looking at their neighbors with jealous, suspicious eyes.”

- Phase II (late 16th and 17th centuries) is called the phase of the doctrine of "Balance of Trade" . A typical representative is Thomas Mun (1571 - 1941).

During this period, mercantilists saw more clearly the relationship between commodity circulation and money circulation. They encouraged the export of money to buy raw materials to produce goods, and sell goods to earn more money.

Furthermore, they believe that: In commercial trade, we must ensure a trade surplus, carry out intermediary trade, implement protective tariff policies, encourage the export of goods...

The idea behind commercial measures, according to Thomas: if money gives birth to commerce, it also gives birth to money, whoever has goods will have money.

2.4.2. French Mercantilism

Famous representatives were Antoine Montchrestien (1575 - 1621) and Jean Baptiste Colbert (1618 - 1683)

- A. Montchretin was the first to introduce the term "Political economics". His views reflected the transitional period from the "Monetary balance sheet" theory to the theory of the trade balance sheet. The socio-economic conditions of France at that time (1/2 of the population were farmers) influenced A. Montchretin's economic thinking. He considered farmers as the support of the State, the country's assets were not only money but also the population (especially farmers), trade was the main purpose of many different industries, and commercial profits were legitimate.

- JBColbert proposed the financial system of France within 100 years, so it is also called Colbertism. He also believed that foreign trade has the ability to make the people prosperous, the strength of the country is determined by the amount of money. He focused on developing industry but his measures to promote industry caused agriculture to decline such as the policy of lowering the price of agricultural products, forcing wheat to be sold at any price once brought to the market and not allowed to be transported home.

In short, mercantilists all aimed to accumulate a lot of money and focus on developing trade, but each country had different methods of implementation and was affected by socio-economic circumstances. Compared to England, in France, IT was less theoretical and more practical, the mercantilism was somewhat not thorough and began to disintegrate.

2.5. The Disintegration of Mercantilism

2.5.1. Reasons for IT Disintegration

The disintegration of IT began in the 17th century, first of all in England, due to the development of the handicraft workshop, the interests of the bourgeoisie shifted to the production sector. The initial accumulation period of capitalism ended and the period of capitalist production began. The one-sided nature of IT was clearly revealed when it considered money as the sole standard of national assets, only focused on circulation and exchange, did not know the economic laws, and managed the economy mainly based on the main intervention of the State.

2.5.2. Critique of Mercantilism

Representative of the period of IT's disintegration was the English economist Duley North (1641 - 1695), who criticized the basic views of IT.

- Regarding foreign trade: If IT considers foreign trade as war, a measure to harm the other side to get rich, then D. North believes that trade is an exchange that benefits both sides.

- When evaluating currency, he said that the amount of currency depends on the demand of commercial circulation. If the currency increases a lot, the excess money will flow abroad or go into hoarding and vice versa.

- He rejected direct state intervention, and advocated economic freedom at home and abroad.

CHAPTER SUMMARY

Mercantilism can be evaluated through two basic points as follows:

- Firstly , in the historical conditions of the 15th - 17th centuries, the viewpoint of mercantilism made great progress compared to the feudal policies and ideology of the Middle Ages. This is shown in that:

+ Feudal economic ideology is the ideology of a self-sufficient economy (natural economy) so it is very limited, it hinders trade exchange, thus hindering the development of production. IT has overcome this limitation, promoting the development of human productive forces to a new level.

+ Mercantilists, for the first time in history, attempted to perceive and explain economic phenomena from a theoretical perspective, learning to rely on the achievements of human knowledge and to apply scientific methods. Therefore, they opened a new era for the study and perception of economic problems on a scientifically correct basis; completely breaking away from the medieval economic thought of explaining economic phenomena with religious concepts.

- Second , however, IT still has many limitations, shown in the following:

+ The achievements are still small, the explanation of economic problems is too simple.

+ Mercantilist scholars only proposed principles and platforms based on descriptions and superficial examinations, but had not yet truly found laws reflecting the nature of economic phenomena.

+ Their vision is still one-sided; they only stop at circulation and have not studied the production process, and at the same time have not perceived the whole thing (first of all, the nature of money).

REVIEW QUESTIONS

1. Describe the historical conditions for the birth and basic characteristics of mercantilism.

2. Why did mercantilists value the role of money and commerce?

3. State the main economic characteristics and ideas of IT.

4. How many stages did IT develop through? What was the content of each stage and how was it expressed in England and France?

5. Evaluate the positive contributions of IT to the development in the early stages of capitalism.

6. Describe the basic characteristics of mercantilism. What are the basic contributions and limitations of mercantilism?

7. Why is mercantilism said to play an important role in the formation of the capitalist mode of production?

CHAPTER 3

CLASSICAL BOURGEOISIAL ECONOMIC THEORY

3.1 Physiocracy

3.1.1. Historical context of the emergence of physiocratism

3.1.1.1.The period of primitive accumulation of capital ends.

Like Mercantilism, Physiocracy (CNTN) appeared within the framework of the transition period from feudalism to capitalism, but at a more mature stage of economic development. In the 18th century, Western Europe developed along the path of capitalism and in England the industrial revolution began. In France, capitalism with the system of manual workshops had firmly taken root. That required an urgent review of the economic platform and doctrine of IT. The period of initial accumulation had ended and the use of trade to exploit the colonies was no longer appropriate.

As the development of the factory system made industrial profits higher and more stable than commercial profits, the bourgeoisie grew and demanded the liberalization of trade.

The views that exalt money and the source of wealth of nations are based on trade appear outdated and hinder the production process.

3.1.1.2. Transition period from feudalism to capitalism

Physiocracy emerged in the mid-18th century from the special economy of France at that time, which was the stagnation of the agricultural economy. The harsh domination of the feudal land ownership regime with a high level of exploitation. Feudal land rent accounted for 1/4 to 1/3 of the agricultural products produced, in addition, farmers had to pay many other taxes and tithes to the church.

Agriculture was also severely damaged by the mercantilist policies of finance minister Colbert, such as lowering grain prices and implementing measures to plunder agriculture to develop the "starve-to-export" industry.

The above situation caused agricultural decline, the lives of French farmers were miserable, and famine lasted so long that the Volte church sarcastically said: "farmers talk more about wheat than about God".

To fight against the ideology of IT, to find a way to liberate the peasant economy from feudal production relations, to develop agriculture in the capitalist style, the physiocrat school appeared.

The common feature of the physiocrats is that they have transformed the research object of economic and social sciences into the field of agricultural production. The physiocrats highly appreciate the role of the industry.

agriculture. Because they believe that: human society develops according to natural laws, which is agriculture. Only agricultural labor is useful labor, profitable labor, because it creates pure products for society, so if you want to be rich, you must develop agriculture.

The outstanding representatives of CNTN were Fransois Quesnay (1694 - 1774) and Anne Bobert Jacqué Turgot (1727 - 1771).

K. Mark considered the physiocrats as defenders of capitalism, pointing out the need to switch to a capitalist way of doing business: “Capitalism opens a path for itself within the framework of feudal society.”

3.1.2. Main economic viewpoints, theories and doctrines of the physiocrat school

3.1.2.1. The physiocrats harshly criticized mercantilism.

First , the merchant's profit is due to saving on trade costs. According to the physiocrats, the profit that the merchant gets is only the saving on trade costs. In fact, in the purchase and sale of goods, neither the buyer nor the seller gains or loses anything. He asserted that the merchant's money is not the profit of the country. Turgot also argued that trade itself cannot exist if the land is divided equally among everyone and each person only has the amount " necessary for subsistence".

Second, they criticized the overestimation of the role of money. They believed that money, whether it was much or little, did not matter, as long as there was enough money to maintain prices corresponding to goods. Boisguillebert harshly criticized the mercantilist ideology that overestimated the role of money, and harshly condemned the price policy of Minister Colbert. He proved that a nation's wealth was useful things, and first of all, agricultural products, which needed to be encouraged.

Third, oppose tax privileges and have a uniform tax, which will increase freedom of circulation, stimulate people to produce and enrich themselves.

Fourth, criticize commerce for promoting practical production. Mercantilism considers the accumulation of gold as the source of wealth, thus giving birth to a fleet of merchant ships that specialize in exploitation. On the contrary, physiocratism believes that there must be an agriculture that enriches everyone. Money is nothing, production is practical.

Fifth, promote freedom of movement and trade, and criticize protectionism. They promote freedom of movement and trade to create resources for enrichment and economic growth.

Sixth, if mercantilism turns the state into a businessman and opens the way for business to operate. Physiocracy advocates “freedom

action”, “against the omnipotent state”, private liberty not undermined by law and trade unions.

3.1.2.2. Economic policy platform of physiocratism

In essence, the platform is the viewpoints, strategies and policies aimed at economic development, first and foremost agricultural development:

- Views on the State :

They believed that the State had a supreme role above all members of society, the State tended to be omnipotent, protecting the interests of the nobility, landlords and merchants.

- Priority views for agricultural production:

They believe that only agricultural production can produce goods and wealth... therefore, the cost of agricultural production is the cost of production, the cost of profit, so the government needs to invest in increasing the cost of agriculture.

The policy allows farm owners to freely choose their business and production lines, choose livestock, and has priority in providing fertilizers. Encourage them to export recycled agricultural products, not raw materials: they must produce for export what they consume.

Investment policy for roads and bridges: Take advantage of cheap waterways to transport goods. It is necessary to oppose the policy of low agricultural prices to accumulate on the backs of farmers. Therefore, it does not encourage production, which is not beneficial for production and people's lives. The best way to manage is to maintain complete freedom of competition.

- Financial perspective :

Especially the issue of taxation, income distribution... Should give incentives to agriculture, farmers and ranchers... not to nobles, clergy, merchants.

Thus, the economic platform of the physiocrats has outlined a number of viewpoints and policies that pave the way for agriculture to develop in a new direction. The platform values and promotes agricultural production. However, the platform has limitations: it does not value the role of industry, trade, and the market economy, but tends toward pure agriculture.

3.1.2.3. Doctrine of natural order

CNTN used the doctrine of natural law to draw conclusions in economics. According to F. Quesnay, there are two types of natural laws: physical laws that operate in the natural realm and moral laws that operate in the socio-economic realm. Moral laws are as necessary as physical laws. The basic content of the theory of natural order is:

- Recognize the role of individual freedom, consider it an indispensable natural law of human beings. Oppose the feudal regime and consider it an abnormal regime.

- Advocating free competition among commodity producers.